Goldman Upgrades Tiffany; Raises Price Target

Goldman Sachs upgraded its rating of Tiffany & Co. to "neutral" from "sell," citing a rebound in the Japanese market and the retailer's success in passing along higher commodity prices to consumers.

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Tiffany Gift Box

The luxury goods seller had been on Goldman Sachs' sell list since Sept. 23, 2010, according to a report released on Thursday. During the past 12 months, the company's stock rose 72.9 percent—outperforming the S&P 500's 12.5 percent increase during the same time period.

The investment bank said its negative view on Tiffany failed to materialize due to three factors:

Tiffany has been helped by a faster-than-expected Japanese recovery. Japan's jewelry category in department stores has seen recovery after the country's March earthquake.

The luxury brand has successfully been able to pass higher commodity costs, including diamonds, gold, platinum and silver, to consumers.

The investment bank had expected Tiffany's valuation gap relative to department stores to narrow, but this prediction did not materialize. Rather, "the market has driven a wider valuation wedge between global luxury brands and domestic, low-growth department stores," according to the report.

In the report, Goldman also raised its 12-month price target for Tiffany to $77 from $68.